Volume 2014, Issue 338,
March 2014

Finance Minister Pravin Gordhan presented a very conservative and stabilising budget to Parliament on Wednesday 26 February 2014. It was predictable despite some concerns that he may deviate from previous plans due to economic pressures facing the country. There were no real surprises, and for many this was a surprise.

One of the positive outcomes from Finance Minister Pravin Gordhan's Budget speech is the fact that Parliament proposed an increase in the cumulative exemption for retirement and severance benefits from R315 000 to R500 000. This will result in a higher tax-free portion once these benefits are paid out.

Smokers and drinkers will again pay duly for their guilty pleasures. Finance Minister Pravin Gordhan announced in his Budget speech that excise duties on alcoholic beverages and tobacco products will add 9 cents to the price of a 340 ml can of beer, and 68 cents to the price of a packet of 20 cigarettes. The price of whiskey will increase by R4.80 a bottle. These changes will take effect immediately.

A combination of the lack of surprises from recent Budgets and the advent of modern technology means that the annual Budget speech is no longer the "must not miss" event that it was when I was doing my articles in the early 1990s. Then again, with the speech and all the relevant documents freely-downloadable from the National Treasury website the moment the Finance Minister says "Mr President...", taking notes during the speech is no longer necessary.

Consumers should brace themselves for more fuel price increases in the coming months. Although the rand gained some ground to the dollar in the days leading up to the Budget, figures from the Central Energy Fund (CEF) show that the average under-recovery on 93-octane fuel has been just over 32 cents during the first few weeks of February, which suggest that the petrol price rise again in March.

National Treasury has proposed an increase in the tax-free lump-sum amount paid from retirement funds from R315 000 to R500 000. This will be beneficial to (especially) lower-income earners, who may in the past have been required to pay tax on their lump sum in retirement, even though they weren't entitled to a deduction while working since their taxable income were below the tax-free threshold.